FRIENDS Consult’s Role in Boosting the Retail Government Securities Market in Uganda
Say hello
When you buy and sell Uganda Government securities with convenience using your phone, you might want to say “hello” to us at FRIENDS Consult. Before this could happen, we conducted a comprehensive market study, funded by Financial Sector Deepening (FSD) Uganda for Bank of Uganda. This was to explore the market viability of enhancing retail participation in Government securities through mobile money platforms. The year was 2017.
Why the necessity?
While Uganda had seen robust economic growth and poverty reduction (overall financial inclusion at over 80% and absolute poverty below 30%), there was still something to improve. The gross national savings lagged at about 11% of GDP, way below the 23.3% low-income country average. Government’s target is of 35% by 2040. Something needed to be done to boost savings, and Government was not going to just hope; it took action by making access to Treasury security investments available to all through mobile money.
Multiple roles of Government securities and access for the masses
Government securities (Treasury bills and bonds) serve to manage liquidity, curb inflation, and fund public expenditure including infrastructure, but retail investor uptake was minimal at 1.1% due to low awareness, perceived complex processes, and bureaucratic hurdles. On the other hand, high mobile money penetration (93% awareness, 95% usage) presented an opportunity to ramp up access to the Government securities market, allowing retail investors to open accounts, invest and receive interest via mobile wallets without bank involvement.
Some findings
From vast primary data collection, key informant interviews, focus group discussions and some secondary data review, the analysis concluded that nearly 6 million adults save regularly (average <UGX 100,000). Self-employed individuals (48%) dominated, with incomes of UGX 101,000-500,000, part of which they saved.
The analysis identified segments that would breed demand and concluded that there was adequate effective demand. At the time, we identified limitations such as low securities awareness and fraud concerns, which had to be addressed.
Happy with our recommendation
FRIENDS Consult recommended that Government and Bank of Uganda go ahead to avail Treasury investment opportunities to small retail investors through mobile money. This was done and now we can all invest in Government securities using our phones. At FCL, we are happy that we played a role in this.
Dr. Keren Obara.
Digital Marketing Associate